Legislature(2003 - 2004)
03/02/2004 08:05 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 461-EMERGENCY SERVICES DISPATCH/911 SURCHARGE CHAIR MORGAN announced that the final order of business would be HOUSE BILL NO. 461, "An Act relating to enhanced 911 surcharges and to emergency services dispatch systems of municipalities, certain villages, and public corporations established by municipalities." Number 0555 MATTHEW RUDIG, Staff to Representative Jim Holm, Alaska State Legislature, spoke on behalf of the sponsor of HB 461. Mr. Rudig provided the following testimony: Essentially, HB 461 gives municipalities local control. We are changing statute to give municipalities the ability to increase emergency dispatch surcharges for the users of the service. ... "Enhanced 911" ... is a relatively new innovation in rescue technology. It can pinpoint the visual location and phone number of a caller so an EMT unit can know the exact location and the phone number of the emergency and ... act more rapidly .... There is little debate as to the merits of this service ... it's a good program. Municipalities have established this system all over the country .... The State of Alaska recognized the importance of this technology when the legislature ... amended statute in 2001 ... and added ... enhanced 911 to the existing statute. Currently, a municipality in statute may only charge 75 cents per month, per line for the system. By adopting this legislation in House Bill 461, we are giving municipalities the ability to recover the costs of the operations of enhanced 911. This bill has ... two provisions regarding that point. First, the initial charge that a municipality may charge is raised from 75 cents to 85 cents per month, per line for the overall system. Second, municipalities will have the capability to impose a surcharge of up to $2.15 for the specific use of funding operations of the enhanced 911 system. This surcharge will be used for the dispatch of the system. Now this is an important distinction. So, I want to make this clear. We have a system in place, the building, [and] the technology. However, we have no mechanism in statute to specifically allow municipalities to recover the costs of the direct operations. Therefore, municipalities are forced to shift that burden directly to the property tax owners .... Now, this bill also adds another important distinction to existing statute. If you look on page 3 of the bill, lines 18-20, it states: "The municipality may only use the emergency services dispatch surcharge for the actual labor and equipment used to provide emergency services dispatch." While the amount they may charge is up to $2.15 per month for the service, the city or borough cannot charge more than the actual cost for equipment, labor, and service as I just described. The city cannot use the funds from the surcharge in any other manner. They have to review their costs annually and then they cannot overcharge the phone users. The statute serves as an automatic check on the municipality. Yes, people's phone bills could increase due to this surcharge. But it is solely to recover the costs associated of a working system already in place. Currently the statute does not account for this. Cities and boroughs are using property tax dollars to recover the costs. In essence, not all of the users are paying for their service. So essentially, ... this bill is the legislature giving municipalities the ability to recover costs of a working, operational system. Nothing in this bill states that the municipality has to impose this surcharge. That is for the municipality operating the system to decide. The legislature is just providing them with a vehicle to do so. And I urge this committee to consider this bill because it is clearly an important step to help municipalities around the state deal with this problem. The legislature is not only giving municipalities the ability for local relief but they're also providing Alaskans with further local control at the lowest level. Number 0920 REPRESENTATIVE SAMUELS inquired as to how much money Anchorage would collect from this. MR. RUDIG answered that he didn't know. REPRESENTATIVE SAMUELS indicated that shifting the charge to phone users sort of skirts tax cap issues. He opined that by paying through the property tax, everyone is paying because individuals either own their home or rent a home for which the property tax is incorporated. He surmised that by allowing the phone company to collect this through a charge rather than a tax, general fund dollars can be saved or spent elsewhere. He inquired as to how much money this would be in Anchorage. MR. RUDIG pointed out that the property tax payer is paying for the emergency dispatch and operations in a state building or federal building with multiple lines. Mr. Rudig suggested that there are 42,000 lines in Fairbanks and another 46,000 who aren't paying for the [emergency dispatch and operations] service. He stressed that the municipalities are given a check and they have to be accountable for the surcharge. Therefore, this legislation shifts the burden to the municipalities. Number 1102 REPRESENTATIVE KOTT inquired as to the problem with allowing a local government to assess its costs through property taxes. He indicated that those individuals with multiple lines would fare better with the property tax covering the cost because it would be spread across the board, which would be more equitable. MR. RUDIG opined that [HB 461] makes it a more user-based fee. He pointed out that this legislation provides a municipal option. Number 1233 STEVE THOMPSON, Mayor, City of Fairbanks, testified in favor of HB 461, as it's broad-based legislation that covers what is necessary in most communities in the state. Mayor Thompson pointed out that most communities have tax caps or revenue caps. With revenue sharing dwindling, the increase in the Public Employees' Retirement System (PERS) contribution, and the increase in the federal match for the federal highway dollars, Fairbanks experienced a 10 percent reduction in revenues. There is no way to recover that money due to the tax and revenue caps. Therefore, the City of Fairbanks has experienced a 10 percent reduction in general fund dollars available to run the dispatch center and other operations. Mayor Thompson expressed concern that a 911-dispatch center may not be properly staffed. Furthermore, whenever there is a reduction in revenues, the first thing to be reduced is training. This legislation provides a user fee in order to ensure that the 911-dispatch center is properly manned with individuals who have been properly trained. He opined that people wouldn't balk at paying for this service to be available. MAYOR THOMPSON turned attention to AS 29.35.131(b), which in part read: "A customer that has more than 100 local exchange access lines from a local exchange telephone company in the municipality is liable for the enhanced 911 surcharge only on 100 local exchange access lines." Therefore, a large company would have a maximum as far as its liability. Mayor Thompson opined that this legislation doesn't pose an undue cost to businesses to upgrade the phone system if there is an exchange in the building that doesn't specify the location [within the building]. By attrition, the aforementioned will happen, he predicted. Mayor Thompson noted that [Fairbanks] is Phase 1 compliant with all of the hard lines and work is continuing with the local companies and the others with regard to the enhanced wireless 911 service. However, to accomplish the aforementioned, everyone will have to purchase cell telephones. He estimated that it will take about five years to accomplish the enhanced wireless 911 service. This legislation provides funds so that all of the aforementioned can occur over a period of time while relieving communities that provide life-saving service. Number 1502 REPRESENTATIVE KOTT surmised then that there is an exception for local governments because local governments won't pay any more than 100 lines, although there may be 3,000 lines in different locations. MAYOR THOMPSON pointed out that [the 100 line exception] is in existing statute, AS 29.35.131(b). Number 1556 KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML), commented that it's exciting to make Alaska a better place. The key issue is revenue for the dispatch centers. In the last six years, the total amount of revenue for both sales and property taxes has increased 29 percent. The aforementioned is very significant and illustrates that municipalities are paying their own way. Spending hasn't increased to that amount because the amount that taxes have increased is fairly close to the cuts in revenue sharing and other cuts [municipalities have faced]. With the revenue caps in place, there isn't the flexibility to go higher. Mr. Ritchie pointed out that there is the possibility of having a better system, but there is the lack of available revenue to [achieve a better system] and property taxes may not be the best way [to raise funds for an enhanced 911 system]. Mr. Ritchie emphasized that taxes, surcharges, or fees are just as difficult to raise on the local level as on the state level. Therefore, it requires a great selling job to get the public on board. This legislation merely allows the possibility of a municipality making some increases in a process that allows everyone in the community to offer their opinion. This [legislation] merely authorizes the municipality to raise rates and go to the maximum, if it can be sold to the taxpayers at the local level. Number 1721 REPRESENTATIVE SAMUELS related his understanding that AML and the Conference of Mayors supports both HB 461 and HB 499 separately. Therefore, he surmised that AML supports raising every telephone line in the state by $5 per month. MR. RITCHIE clarified that AML and the Conference of Mayors supports the concepts of both pieces of legislation, but work is necessary to ensure that they make sense. He related his understanding that the two concepts presented in HB 461 and HB 499 would be merged. He pointed out that HB 461 anticipates a maximum of $3 per line per month and HB 499 anticipates a maximum of $2, and therefore he surmised that it would be no more than $3. REPRESENTATIVE SAMUELS said that isn't what the legislation says, and related his understanding that [both pieces of legislation] have a total fee of up to $5 per line per month. REPRESENTATIVE KOTT inquired as to why local governments with 100 lines or more should be given a break at the expense of constituents or small businesses that may have 10 lines in a central location. He said he understood that this is an issue of revenue. MR. RITCHIE pointed out that HB 499 would eliminate the [100 lines or more exemption] language while HB 461 leaves it alone. From a municipal level it probably doesn't make a lot of difference because the money is being collected from "yourself" to pay "yourself." Therefore, it's basically a wash because the expense of running the 911 center is there regardless. Although this isn't problematic at the municipal level, it could be at the state level. REPRESENTATIVE KOTT opined that if the [100 lines or more exemption] language was eliminated and specified that the surcharge will be based on the number of lines one has, then the surcharge per line would be less. MR. RITCHIE commented that Representative Kott's argument seems reasonable. Number 1965 REPRESENTATIVE CISSNA surmised that both HB 461 and HB 499 are aimed at municipalities, which see a need but it requires revenue to provide that need. She inquired as to why there is [a maximum] limit at all, and questioned why something couldn't be constructed to give the total decision to the local government. Number 2042 REPRESENTATIVE JIM HOLM, Alaska State Legislature, sponsor of HB 461, related his understanding that there has never been any discussion regarding not having any control at all with regard to the amount of the fee. He explained that when he was presented with the legislation the [rate] was set at $1.45, and therefore he questioned what would occur in the future. Representative Holm acknowledged that it may well be appropriate that perhaps an upper limit shouldn't be set because at some point the locals will have to address it anyway. However, he noted that he wasn't sure how the Regulatory Commission of Alaska (RCA) or another rate controller would "play into" this legislation. Representative Holm deferred to Mayor Thompson, who instigated the introduction of the legislation. REPRESENTATIVE SAMUELS reiterated his earlier question regarding whether these pieces of legislation are being viewed as mutually exclusive. REPRESENTATIVE HOLM explained that both pieces of legislation originated independent of each other. Representative Holm related his understanding from Mayor Thompson that since the language is considerably different in the two pieces of legislation, a marriage of the two would be difficult, and therefore the two pieces of legislation should probably stand- alone. However, Representative Holm said he wasn't entrenched in that thinking. With regard to the upper limit, he opined that the local issue is with regard to whether to use the upper limit. He noted that he suspected that there will be differences in the cost of these services across the state. Therefore, as a statewide policy, it may be best not to set a limit at all. Number 2264 REPRESENTATIVE KOTT reiterated his earlier question regarding whether it's fair to offer municipalities an exemption from the surcharge once there are 100 lines at the expense of residents that may have four or five lines at one residence. He questioned whether the exemption should be eliminated in order to spread the costs throughout the users, and therefore lower the cost per line. REPRESENTATIVE HOLM said he would suggest that Representative Kott is probably correct. However, he pointed out that in many cases [those entities being exempted because of having over 100 lines] include hospitals and universities. The chances of someone using 911 would be much greater with individual service as opposed to large businesses or government agencies, he opined. For example, [large businesses or government agencies] are open 7.5 to 8 hours a day and the phones aren't used the other portion of the day. However, a residential phone carries a greater possibility of using the 911 service. REPRESENTATIVE KOTT informed the committee that he has four lines at the same location, within 20 feet of each other. To place a surcharge on each of the aforementioned lines, while exempting [entities after reaching 100 lines] is unfair, he opined. REPRESENTATIVE HOLM indicated his agreement with Representative Kott. Representative Holm mentioned his belief that those who demand services should pay for the service if possible. In this particular case, it's a small cost per month for a service that has huge benefits. He expressed his desire to have the opportunity to recover those costs. Number 2560 ED OBERTS, Mayor's Assistant, Office of the Mayor, Kenai Peninsula Borough, noted his appreciation for the legislature taking the time to review this important issue. One of the key issues to keep in mind is the accuracy of the 911 databases, he said. Any assistance from the state is appreciated, he remarked. Number 2576 MARK JOHNSON, Chief, Community Health & Emergency Medical Services, Division of Public Health, Department of Health and Social Services (DHSS), reiterated that the [department] supports the concepts of both HB 461 and HB 499 because the department wants to see improved service. With regard to the earlier mention of the telephone companies collecting the fees, the telephone companies would have to upgrade their equipment as would the municipal/local dispatch centers. REPRESENTATIVE KOTT announced that now that he has a better understanding of HB 461 and the costs associated with it, there would be some fiscal impact. Therefore, a fiscal note will have to be acquired. Number 2635 CHAIR MORGAN commented that since both pieces of legislation have raised considerable questions, both HB 499 and HB 461 will be assigned to a subcommittee comprised of Representative Wolf, chair, and Representatives Kott and Cissna.
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